Judges, legislators, corporations are conspiring to steal public pension funds

You read that right. If they can get away with it, they’re going to steal (loot) public worker pensions. What public workers were promised, they won’t get.

This is terrible news, and according to David Cay Johnston, they’re all in on it. By “all” he means “Courts, legislatures, and corporations … all working in concert not to pay the full benefits owed.”

That’s a powerful conspiracy, and a conspiracy it is. Here are the details. Johnston, writing in the new Newsweek (my emphases):

Anyone in a public-sector job looking forward to retiring in comfort should look carefully at what is going on in Detroit and Springfield, Ill. Sherlock Holmes would call it the case of the missing pension money.

Money makes the world go around

News leaking out this week from the Motor City tells how the enormous gap between the pensions workers earned and the money set aside to pay for them will be closed. By stealing from the workers.

Courts, legislatures, and corporations are all working in concert not to pay the full benefits owed. For decades, political and business leaders failed to set aside the right amount of money each payday to cover the pensions workers earned and, in some cases, covered up the mismanagement of pension fund investments.

In other words, they failed to pay into the pension funds as they promised, and they’re trying to get off the hook for it. As Johnston notes:

This is nothing short of theft, as pensions are simply deferred wages, that is, money that workers could have taken as cash in their regular paychecks had they not opted to set it aside.

The mechanics are working like this:

In Detroit, a federal bankruptcy judge handling the city’s Chapter 9 case held Tuesday decided he could safely ignore a Michigan Constitution provision barring any reduction in pension benefits to already retired public sector workers. Judge Steven W. Rhodes went beyond asserting the supremacy of federal law over state regulations, ruling that the pensions workers earned were a mere “contractual obligation,” no different from any other bill the city owes but lacks the money to pay.

As Johnston notes, if that stands, look out everywhere a public entity wants to dodge pension payments. As he points out, the same thing is happening in Illinois. In both cases, the entity responsible for making payments to the pension funds were remiss — they under-contributed. Now that they’re broke, they’re trying to skate. If they succeed (they well might), workers will suffer.

And you thought only the banksters were looting us. Nope. As Johnston reminds us, it’s all of them — “Courts, legislatures, and corporations” working “in concert.” Our Betters, here to serve … themselves, at your expense.

A pension is deferred wages, not a bill that comes due

Pensions really are deferred wages. At contract negotiation time, when union and management reach a wage agreement, they first agree on total dollars. The union then decides how they want to allocate those dollars. Their choices are — as current wages, as deferred wages (payments to the pension fund), or as health insurance and other benefits. Remember, though; the first agreement is on total dollars. That’s the wage agreement.

It’s against the law to steal wages. But I guess we’ll be finding out whether that’s still true. At one time, it was against the law for a brokerage firm to steal customer funds. Now, not so much, if you’re a member of the protected “lord and master” class. As Johnston correctly points out, this is “eroding trust in democratic government and the rule of law.” There’s much more about that in Johnston’s article; please do click through. The looting of pensions is pervasive.

Maybe one of these days we’ll be the “lords and masters” — and then we could take our own money back. What do you think? Would the impoverished American people go for that? I guess that jury’s still out.

Pension theft adds to the retirement crisis

Of course this comes at the worst possible time, when millions of workers are facing retirement on terms that will put them into poverty.

The Retirement Deficit

… Not too long ago, pensions also routinely delivered retirement security. But our corporations have cut back on traditional pensions. In 1980, 89 percent of Fortune 100 companies guaranteed workers a “defined benefit” at retirement. The rate last year: only 12 percent.

Companies have replaced traditional pensions with 401(k)s, and many firms don’t even match employee 401(k) contributions. The predictable result? The nation’s “retirement deficit” — the difference between what Americans have saved up for retirement and what they need to maintain their standard of living once retired — now totals $6.6 trillion, says Boston College’s Center for Retirement Research.

Look at that number again. The “retirement deficit” is $6.6 trillion. That equals millions of our brothers and sisters, fathers and mothers, living the rest of their lives in poverty. And at a time of great national corporate wealth, almost all of which is going to the “1% of the 1%” — where all the wealth and power in the country, in fact the world, now reside.

What that means, in practical terms is this:

Is $35 billion enough for David Koch? He’d tell you no.

David Koch, worth more than $35 billion, wants you to have less so he can have more.

So do the Walmart heirs, who own more than do 40% of the rest of us combined.

That’s why, as David Cay Johnston said at the start of this piece, that they’re all in it together, corps, legislators, judges, politicians of all stripes. They’re all part of the club, the one with no one else in it. Some of them talk like you’re in it, but you’re not.

As a friend once remarked: At drug recovery meetings, they often ask you to name your “drug of choice.” Sometimes the drug of choice is just “more.” Sound like our betters, the ruling class? Does to me.

Our lords and masters, addicts all. In charge till we stop them and take away their candy. They aren’t going to stop on their own, and with the sweet deal we’ve already handed them, they won’t go quietly.

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You did the right thing. I had an aunt whose employee was bought up by Sanyo just as she retired. She opted to take a lump-sum payment instead of a monthly check. Two years later after Sanyo moved the business to Alabama and then closed it, the retired workers getting monthly pension checks stopped getting them. Sanyo said it was the dead company’s responsibility, not theirs. And they got away with it.

cole3244

1980 was the tipping point, reagan was the beginning of the end of democvracy and the american dream in america and carter was our last honest and pres of the people.

RepubAnon

This has been going on since the 1980s. One reason that defined pension plans went away was that corporate raiders viewed the money held in a defined benefit pension plan in much the same way as John Dillinger viewed money in a bank vault.

Using such funds to pay creditors, reduce acquisition costs or simply fatten a corporate bank account revives a 1980s debate: Who owns the surplus assets in pension plans? The law says employers must use pension-plan assets for the sole benefit of employees and retirees. However, courts have generally taken the position that a plan’s surplus belongs to employers.

Source: Pension Terminations Become Temptations for Some Employers

What would happen was that a corporate raider would hire some tame accountants, who would claim that a company’s pension plan was “overfunded.” As the pension plan belonged to the corporation, the raider would do a highly-leveraged deal to buy the company, terminate the “overfunded” pension plan, pocket the bulk of the pension’s funding, and put just enough money back into a new pension plan to keep it solvent until the raider could unload the company.

They’re planning to work this game again on the Social Security Trust Fund as well as public employee pensions. We need to stop this – now.

Scott J Tillman

“News leaking out this week from the Motor City tells how the enormous
gap between the pensions workers earned and the money set aside to pay
for them will be closed. By stealing from the workers.”
Enormous gap between earned and set aside. Um. . . seems pretty clear, the money has already been stolen.

Ford Prefect

With respect, “conspiring to” makes it sound like it hasn’t happened yet. But it’s been happening for some time now. Just look at all the municipalities that have BK’d thus far and others that have already enacted “pension reform.” See also, Detroit, a city led by a Democrat whose specialty is in privatization.

I see Digby and others have all adopted the “the RW is conspiring to…” meme in unison. The problem is it’s well behind the Eight Ball. They’re not conspiring. They’re actually accomplishing their goals and the Democrats are nowhere to be found on this, outside some carefully defensive kvetching. They’re not DOING anything. Yet, they’re obviously setting this up to be an election cycle meme, even though they’re not doing anything at the muni, county, state or federal levels.

Perhaps we can address this in terms of what’s actually happening and advocate in terms of offensive action, rather than the usual defensive whinging? Who, after all, is attacking pensions in Chicago and the entire state of Illinois? It’s the (bleep)ing Democrats! Trying to frame this as a purely partisan problem is deeply disingenuous of “liberal” elites at this point and it only obscures reality.

Lastly, let’s remember that public workers, because of their pension systems, are not eligible for Social Security (they don’t pay into SS, so they can’t get it). So as their pensions are destroyed, they have no other means of support.

“There’s a storm coming.” River Tam to Captain Mel Reynolds. “We’ll pass through it soon enough.” Captain Mel Reynolds to River Tam.

rextrek

Bring back the Guillotines!!!!

dula

Most Americans will go along with it because they are envious of/angry at those who fought for their labor rights.

http://poodyheads.wordpress.com/ Daddy Bear

I have an embroidery thingy on my wall that says “Just because you’re paranoid doesn’t mean they’re not out to get you”.

I’ve lived my life by that sampler…

bankster

The way things are going I think an uprising of some sort is inevitable. When it gets to the point where there is nothing to lose by doing so, (and every day it gets closer), it will happen.

(Special note for NSA operatives: I am in no way endorsing or encouraging such behavior and am merely making an observation base on current events. I also broke into the home of a little old lady who only uses this computer to send notes to her Sunday School students so there is no need for you to continue monitoring it).

BTW, I had not looked into the Corzine case in some time and just did so. Miracle of miracles, it appears the “lost” money has been found! The people involved are still bickering over a number of things, but it now appears that “customers” may actually get back all of what they had in their accounts.

As I said last week – “There’s a storm coming, Mr. Wayne” Selena Kyle to Bruce Wayne

Bill_Perdue

Profit is theft.

Management salaries are theft.

Active and retired workers, student workers and single heads of house holds are due a wage and benefits package equal to the amounts paid out in the best trade union contracts. We’re also due interest free quality housing, socialized medical and dental care paid paternity leave for one year six months for spouses, and annual paid vacations of six weeks.

All those items can be paid for by taxes on the rich, based on taxing them at the rate of 100% of income and aggregated wealth per year for any amount from any source over $250,000.00 per year. (Exceptions should be made for the homes and small farms of working people.)

nicho

You had to see this coming. When I retired, I took all my pensions as lump-sum payments. I knew these bastards were going to find a way to steal the money. People told me I was being a “conspiracy nut.” Yeah, right.